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Source: (consider it) Thread: Inheritance Tax
Penny S
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So I remembered correctly. It didn't affect us. There were expenses, of course, and I had the funds to deal with them from matured savings and the lump pension sum, as I had recently retired: these were paid out to me before we split the rest.

Could we have used the otherwise frozen bank account for HMRC?

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Merchant Trader
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quote:
Originally posted by Penny S:
So I remembered correctly. It didn't affect us. There were expenses, of course, and I had the funds to deal with them from matured savings and the lump pension sum, as I had recently retired: these were paid out to me before we split the rest.

Could we have used the otherwise frozen bank account for HMRC?

Apparently not. I never did have to test it but that was the advice I got. Its particularly hard when the Executor is not even a beneficiary. I would like to know if there is a way around this as in other family circumstances we may not be so lucky e.g. if I died, I am sure there would be death duties on the house, I have no cash and my children and the Executors have no money either. How we provide for this - thinking of taking out life assurance just for the death duties but it seems v costly.

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Mere Nick
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While it appears UK tax law limits the amount that can be gifted tax free, maybe it would help out if you started gifting a small part of the ownership of the house each year to each of your heirs. It could also help reduce the value for inheritance tax purposes since having many owners could reduce the value of your portion, especially if the time comes to where you own a minority interest.

When I look online at what the queen owns, it just says the royal family. Maybe they are doing that very thing I have described.

You should go see a pro about that.

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Justinian
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quote:
Originally posted by CL:
Being well acquainted with inheritance tax through a previous job I find that a more accurate appellation is grave robbing.

As literally the only moral problem with graverobbing is that it's normally done by private individuals taking things for private collections rather than for the benefit of all I have no problem with the description.

A better term than graverobbing would be recycling. Recycling of materials locked away from the world by self-aggrandizing tosspots who want to steal things of beauty and wealth out of the world when they die so no one else can have them. Here's to graverobbers, reclaimers of stolen posessions from the ultimate thieves.

And as long as there is a decent excess, inheritance tax comes under the same category.

quote:
Originally posted by Marvin the Martian:
My father was brought up in the same house that his father and grandfather had been brought up in - the house had stayed in the family for three generations. You couldn't do that today - each successive generation would have to sell up and move to a smaller house merely in order to pay the tax.

Is that fair?

Compared to one side of my family not having a penny to their name, yes. Just because your grandparents did something good doesn't mean that the kids get to coast on that ad infinitum.

If your family want to earn enough to maintain that house - and maintainance of the house includes earning enough to pay the inheritance tax where's the problem.

quote:
Originally posted by Anglo Catholic Relict:
It is in effect a tax on the dead, and in my view iniquitous. Something which Richard Hunne objected to, most strongly, and look where it got him.

Dead people can not and should not own property. Where's the inequity. The dead are dead.

quote:
Originally posted by Marvin the Martian:
I fail to see why that would be necessary. But then, I don't hate the idea of people getting richer, or insist that every time money changes hands the government should take a cut.

Given that that money that changes hands only does so because it's backed by the government and the government ensures its value and the fair trading I don't see the theoretical problem. You want all the benefits of good government and modern society without having to pay for them.

quote:
Originally posted by orfeo:
But it's rubbish. The dead person isn't really paying tax.

And neither is the recipient. The recipient is merely organising that the tax is paid in exchange for a pretty huge windfall.

This doesn't mean that there are no problems with the implementation.

And quoting two people for truth:

quote:
Originally posted by Adeodatus:
I think it's a pity that whoever spent their lives building up a hoard amounting to £15million didn't put it to good use while they were alive. I may be doing them an injustice, of course: perhaps the £15million was what little was left of the untold millions they spent feeding and clothing the poor. But I doubt that, and you're welcome to call me cynical.

quote:
Originally posted by Touchstone:
"Some of us pay tax when we die so that all of us can pay less tax while we're still alive."



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Chesterbelloc

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quote:
Originally posted by Justinian:
quote:
Originally posted by CL:
Being well acquainted with inheritance tax through a previous job I find that a more accurate appellation is grave robbing.

As literally the only moral problem with graverobbing is that it's normally done by private individuals taking things for private collections rather than for the benefit of all I have no problem with the description.

A better term than graverobbing would be recycling. Recycling of materials locked away from the world by self-aggrandizing tosspots who want to steal things of beauty and wealth out of the world when they die so no one else can have them. Here's to graverobbers, reclaimers of stolen posessions from the ultimate thieves.

Great. I'm off to rip the wedding ring off your dead granny's finger, then. Ok by you?

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Crœsos
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Graverobbing is like comedy: timing is everything. If you wait long enough you get called an "archæologist".

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Humani nil a me alienum puto

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orfeo

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quote:
Originally posted by Mere Nick:
While it appears UK tax law limits the amount that can be gifted tax free, maybe it would help out if you started gifting a small part of the ownership of the house each year to each of your heirs.

While I'm sure some of my fellow lawyers would delight in the extra work created by people gifting their houses brick by brick, it remains a mystery to me why a government would wish to encourage this kind of complexity.

I mean, I agree with you, this is a strategy that suggests itself. But I think the fact that this would be a good strategy is one of the things that's bad about the tax design.

Making the ownership of people's homes complex creates more chances for disagreements and arguments. You'll have children partially owning homes they don't live in, and then feeling like they've got some say in the running of the house, leading to friction with parents who think it's still THEIR house.

[ 24. August 2013, 00:53: Message edited by: orfeo ]

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Leorning Cniht
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quote:
Originally posted by orfeo:

Making the ownership of people's homes complex creates more chances for disagreements and arguments. You'll have children partially owning homes they don't live in, and then feeling like they've got some say in the running of the house, leading to friction with parents who think it's still THEIR house.

There are, of course, plenty of examples of children arguing with their parents and ultimately throwing them out of "their" house, and plenty more of the children going bankrupt and having to sell this spare investment property they seem to have acquired in order to pay off their debts.
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Gee D
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quote:
Originally posted by Leorning Cniht:
There are, of course, plenty of examples of children arguing with their parents and ultimately throwing them out of "their" house, and plenty more of the children going bankrupt and having to sell this spare investment property they seem to have acquired in order to pay off their debts.

A useful source of work, as often there are at least 3 completely different interests involved, each requiring separate representation, and the activity is much to be encouraged.

I don't know anything of real property law where you are
Mere Nick, but how you can give your house over in bits and pieces is not straight forward here, and again would be a nicely profitable piece of work.

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mertide
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One option here can be to create a family trust for the ownership of the asset, that way only the directors change on their death, the ownership entity continues. Doesn't stop the arguments, and lots of work for lawyers, though. The handing down of a single property through generations seems to imply either low fertility or some pretty unfair inheritance patterns.
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Mere Nick
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quote:
Originally posted by Gee D:
I don't know anything of real property law where you are Mere Nick, but how you can give your house over in bits and pieces is not straight forward here, and again would be a nicely profitable piece of work.

My mother owned a 1/3 interest in some undeveloped land and each year she transferred a portion of that 1/3 to an irrevocable trust that had my brothers and me as beneficiaries. I don't know why you couldn't do that with any other real property though I suspect there isn't a lender in the business that would let you do that if there is a mortgage on it. She did it over several years so that there wouldn't be any gift taxes.

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Gee D
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I was thinking of a trust, with changing entitlements as time progressed. If the beneficial interest changed entirely upon death, then duty used be payable here, and presumably in other jurisdictions. You'd need to build in barriers to prevent using an entitlement as a security, but still avoid the pitfalls in some discretionary trusts. You'd also need somehow to avoid capital gains tax should the trust property be sold and the proceeds used to buy a different residence, and also to ensure that the parents continued to have rights of residence during their lifetimes. Lots of other difficulties to deal with also. Quite a few hours work in that, and at my usual rate we could afford to go to the butcher's every now and then.

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Mere Nick
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quote:
Originally posted by orfeo:
While I'm sure some of my fellow lawyers would delight in the extra work created by people gifting their houses brick by brick, it remains a mystery to me why a government would wish to encourage this kind of complexity.

If you make a terrible mistake and actually come face to face with one of our politicians the chances are best that he or she used to be a lawyer.

Complexity doesn't seem to matter to them. Take the Internal Revenue Code or Obamacare, for examples.

[ 24. August 2013, 04:30: Message edited by: Mere Nick ]

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"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell

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Mere Nick
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Much of what would appear to be a good idea in the UK and maybe some other countries with brazenly rapacious inheritance/estate/income tax codes wouldn't be as needed here because of the size of the estates that can pass to heirs tax free, step up in basis rules, and couples filing jointly being able to make up to $500k tax free profits on the sale of their homes.

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"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell

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Haydee
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The 'family home'?

My mother sold the house my brother and I grew up in after living there for 25 years. Of course it was an emotional wrench, but why on earth would she carry on living in a 4-bed roomed house when it was just her? And do I get it, or my brother (I am NOT going to share a house with him for the sake of both of us...).

As he lives in London and I live in South Africa (and the house is in Devon) perhaps we should dismantle it and split up the building material? Though as it is made of mud (or 'cob' to give it the fancy name) I'm not sure it would travel well.

My parents are very generous and give us their tax-free gift entitlements most years - but that is more than I think I have a right to expect. They 'gave' me a good education and good nutrition/ healthcare etc which is more than many are given. I am now a fully functioning adult and it is up to me to make my own way (and take responsibility for the upbringing of my children).

Anything extra is a windfall, which I am content to share with those who have less than me (in the shape of funding the NHS, social security etc). I am not so happy about some Gvnt decisions about spending, but that is a separate issue from where the money comes from.

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Anglo Catholic Relict
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quote:
Originally posted by Justinian:
quote:
Originally posted by Anglo Catholic Relict:
It is in effect a tax on the dead, and in my view iniquitous. Something which Richard Hunne objected to, most strongly, and look where it got him.

Dead people can not and should not own property. Where's the inequity. The dead are dead.
http://en.wikipedia.org/wiki/Richard_Hunne
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Ahleal V
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quote:
Originally posted by Justinian:
Just because your grandparents did something good doesn't mean that the kids get to coast on that ad infinitum.

Whilst I realise I'm a little late to this party, this line from Justinian hit me rather hard. Why should this be the case? Is it not human principle to pass on what you have gathered to the following generation, and in doing so, bettering their life? Whilst it can be read in both ways, I would think it not only a human principle, but a biblical one.

quote:
A good man leaves an inheritance to his children's children, but the sinner's wealth is laid up for the righteous. <Proverbs 13:22>
The objection seems to be, 'well, the descendants didn't work for it, so it is undeserved.' So what? Many things in this life are undeserved - intelligence, physical ability, good marriages, divorces - the financial outcome of divorces! - sudden and unexpected disability etc.

Whilst you're suggesting that this the post-death distribution of wealth is a way of evening out some of our undeserved problems, I find it more a condemnation by the government of those who have worked above and beyond to improve their resources, and to pass this on to their next of kin. If it's going to be taxed, why work hard to make those resources? Or if you do, do we really think it better that people just idle it away?!

The reason this hit so hard is that I am painfully aware that the only way that those I know in my situation will only ever be able to have a home is through investments made a generation or so before us. And likely, the the only way my descendants will probably be able to afford to go to university is through those same former investments.

x

AV

[ 24. August 2013, 09:31: Message edited by: Ahleal V ]

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Arethosemyfeet
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But, Ahleal, surely if inheritance tax eliminates that advantage, then no-one will be able to buy a house or go to university, and the public policies that have made both of those things excessively expensive will have to change? What you're effectively saying is that it's ok for housing and education to be prohibitively expensive so long as you have access to sufficient funds for yourself and your descendants. I'm afraid that sounds an awful lot like "I'm alright, Jack; pull up 'ladder".
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Ahleal V
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quote:
Originally posted by Arethosemyfeet:
...as you have access to sufficient funds for yourself and your descendants. I'm afraid that sounds an awful lot like "I'm alright, Jack; pull up 'ladder".

I certainly don't want the ladder to be pulled up. I'm sorry if my post came across that way, I didn't mean it to.

TBH, I've been working under the assumption over the last few years that the government were going to raise the IHT bar to £1m, as was promised in 2010. Obviously, this hasn't happened, which I presume is due to the crash, and the austerity measures taken.

I'm afraid that the last few months of meeting with solicitors regarding IHT has sharpened my feelings regarding this matter. Again, I can't help but think it is iniquitous for the government to tax what has already been taxed. Let them tax the *really* super-rich, or the corporations.

x

AV

[ 24. August 2013, 10:00: Message edited by: Ahleal V ]

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QLib

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Ahleal - talk about proof-texting! you shoot yourself in the foot when you quote one verse from the bible to justify not wanting to give part of your wealth to the communuty for the building of schools, hospitals, a police service, a fire service, courts, roads and bridges. The bible is generally perfectly clear in what it says about giving to the poor and succouring widows and orphans.

There's a balance to be struck, as with everything. Irrespective of tax, there's not a lot of point in scrimping and saving once you have enough to keep you comfortable if you're lucky enough to have a long life (and that's actually quite a lot). And, anyway, it's not as though the government is going to take the whole lot. Inheritance tax, as in the UK, does actually allow you to leave a pretty fair whack for your children and children's children - if you're lucky enough to have those. But don't forget that - even if you leave them as millionaires, they will still need a society to live in, and let's hope (for the sake of their souls) that they prefer one where they don't have to step over people sleeping rough on the street as they make their way to their luxury penthouse apartments.

ETA: X-posted with your last post, but I don't think it makes any difference. There has to be a boundary somewhere and the UK's boundary of £325,000 seems pretty fair to me. Lots of things are taxed twice. My salaray is taxed and then I pay VAT on a variety of goods. Nothing is ever going to be 100% fair. Campaign for a change by all means, but I don't know how people manage not to feel ashamed of publicly complaining about a problem most people would love to have.

[ 24. August 2013, 10:10: Message edited by: QLib ]

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Arethosemyfeet
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£325000 is more than enough to cover a university education and a 10% deposit on a house for 3 children in most parts of the country - and with current laws they'll still keep 60% of anything over that amount.

The question you have to answer, given that we still have a budget deficit, is who should pay instead of those who are getting a massive windfall they have done nothing to earn?

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Higgs Bosun
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I'm glad that there has been some theological input on this thread. Perhaps I can remind us:

"Do not store up for yourselves treasures on earth...but store for yourselves treasures in heaven"

"life does not consist in an abundance of possessions"

"the deceitfulness of wealth chokes the word"

There is a story about a man who built barns to store his abundance. He is known as the Rich Fool.

The system of Jubilee in the OT law means that property reverts to its original owning family each Jubilee. This seems to be ensure that each family has access to the means of production, and that no-one can accumulate significantly more wealth than others in the longer term.

It seems to be that IHT is not out of tune with these.

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Higgs Bosun
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quote:
Originally posted by Arethosemyfeet:
£325000 is more than enough to cover a university education and a 10% deposit on a house for 3 children in most parts of the country - and with current laws they'll still keep 60% of anything over that amount.

I might add to this that the argument about "how can children afford to go to university or buy a property with IHT" is incorrect in another way. Most people (with significant assets) die when older than 60 years of age, when their children will have already gone to university and have already reached the age when they would need to buy dwelling. So, what is happening is that before their parents die, the children are having to rely on "The Bank of Dad".

People who die younger, with dependents, are more likely to be in debt than have significant assets.

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Mere Nick
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quote:
Originally posted by Higgs Bosun:
I'm glad that there has been some theological input on this thread. Perhaps I can remind us:

"Do not store up for yourselves treasures on earth...but store for yourselves treasures in heaven"

"life does not consist in an abundance of possessions"

"the deceitfulness of wealth chokes the word"

There is a story about a man who built barns to store his abundance. He is known as the Rich Fool.

The system of Jubilee in the OT law means that property reverts to its original owning family each Jubilee. This seems to be ensure that each family has access to the means of production, and that no-one can accumulate significantly more wealth than others in the longer term.

It seems to be that IHT is not out of tune with these.

As long as you leave out teachings about covetousness and theft, maybe.

--------------------
"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell

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Arethosemyfeet
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quote:
Originally posted by Mere Nick:
As long as you leave out teachings about covetousness and theft, maybe.

Taxation isn't theft, and ensuring that everyone has enough to live on, healthcare and education is not covetousness.
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Mere Nick
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quote:
Originally posted by Arethosemyfeet:
quote:
Originally posted by Mere Nick:
As long as you leave out teachings about covetousness and theft, maybe.

Taxation isn't theft, and ensuring that everyone has enough to live on, healthcare and education is not covetousness.
So if no one ever dies again Johnny can't learn to read or get his tonsils taken out? Interesting concept.

--------------------
"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell

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Arethosemyfeet
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quote:
Originally posted by Mere Nick:
quote:
Originally posted by Arethosemyfeet:
quote:
Originally posted by Mere Nick:
As long as you leave out teachings about covetousness and theft, maybe.

Taxation isn't theft, and ensuring that everyone has enough to live on, healthcare and education is not covetousness.
So if no one ever dies again Johnny can't learn to read or get his tonsils taken out? Interesting concept.
Did anyone say that inheritance tax was the only valid form of taxation?
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Mere Nick
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quote:
Originally posted by Arethosemyfeet:
Did anyone say that inheritance tax was the only valid form of taxation?

No, but this thread is about inheritance tax.

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"Well that's it, boys. I've been redeemed. The preacher's done warshed away all my sins and transgressions. It's the straight and narrow from here on out, and heaven everlasting's my reward."
Delmar O'Donnell

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cliffdweller
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quote:
Originally posted by Mere Nick:
quote:
Originally posted by Arethosemyfeet:
quote:
Originally posted by Mere Nick:
As long as you leave out teachings about covetousness and theft, maybe.

Taxation isn't theft, and ensuring that everyone has enough to live on, healthcare and education is not covetousness.
So if no one ever dies again Johnny can't learn to read or get his tonsils taken out? Interesting concept.
If no one ever dies again than we're going to have way more interesting challenges to contend with than simply how Johnny will learn to read or get his tonsils taken out (do they still do that???)

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Marvin the Martian

Interplanetary
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quote:
Originally posted by QLib:
...to justify not wanting to give part of your wealth to the communuty for the building of schools, hospitals, a police service, a fire service, courts, roads and bridges.

That's the thing though - everybody will have given a significant part of their wealth to the government. Income tax and national insurance take over a third of it straight away. Add on VAT, council tax, taxes on alcohol, tobacco and petrol and all the other extra taxes they use to wring as much out of us as they possibly can, and you're probably looking at every single person in the country having over half of their wealth taken off them by the taxman during their lives.

Is that not enough?

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Touchstone
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# 3560

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quote:

Originally posted by Mere Nick:
quote:
--------------------------------------------------------------------------------
Originally posted by Arethosemyfeet:
Did anyone say that inheritance tax was the only valid form of taxation?
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No, but this thread is about inheritance tax.




In the UK we believe in the virtues of a mixed tax system. This is to ensure that taxation does not bear down too heavily on any one group. Personally I think that our current tax system is very biased in favour of the rich (e.g. the iniquitous rate of VAT is particularly oppressive to widows and orphans).

IHT must be considered as part of this balance, and it is a useful part of the mix because it is paid only by the rich. To reiterate, less than 5% of UK estates are liable to it. For the large majority of us, it isn't a major concern.

Even then, the rich have many perfectly legal ways of avoiding it. Personally I think these loopholes should be closed, with the possible exception of tax relief on charitable donations. This would mean that more estates have to pay IHT and the rate could be lowered (and maybe the threshold raised), but IMO it should always be a part of the tax portfolio.

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cliffdweller
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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by QLib:
...to justify not wanting to give part of your wealth to the communuty for the building of schools, hospitals, a police service, a fire service, courts, roads and bridges.

That's the thing though - everybody will have given a significant part of their wealth to the government. Income tax and national insurance take over a third of it straight away. Add on VAT, council tax, taxes on alcohol, tobacco and petrol and all the other extra taxes they use to wring as much out of us as they possibly can, and you're probably looking at every single person in the country having over half of their wealth taken off them by the taxman during their lives.

Is that not enough?

Do you have something particular you'd be willing to give up? Not something that only applies to "other people", but one of the thousands of often invisible benefits you enjoy every day that you'd be willing to forgo to lower taxes?

Budgeting is always tiresome. It's tiresome on the national scale, it's tiresome on the provincial/state level, it's tiresome on the local level. Church budgets are tiresome and so are household budgets. They always, always require hard choices about which good things will be eliminated to allow for which even greater good things. The "fat" everyone assumes is so prevalent and easily eliminated always turns out to be elusive and highly subjective. And yet budgets are necessary, important, and as has been said recently "moral documents". They are the way we define, as a family, a church, a community, and a nation, what we value, what we believe, what we are willing to invest in.

So answering questions like when is it "enough" is pretty meaningless until you start talking specifics. And as long as those specifics are always coming off of someone else's plate, I'm really not all that interested.

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Arethosemyfeet
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# 17047

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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by QLib:
...to justify not wanting to give part of your wealth to the communuty for the building of schools, hospitals, a police service, a fire service, courts, roads and bridges.

That's the thing though - everybody will have given a significant part of their wealth to the government. Income tax and national insurance take over a third of it straight away. Add on VAT, council tax, taxes on alcohol, tobacco and petrol and all the other extra taxes they use to wring as much out of us as they possibly can, and you're probably looking at every single person in the country having over half of their wealth taken off them by the taxman during their lives.

Is that not enough?

The % of GDP that is taken in tax is 38.9% as of 2011, nowhere near half. And very little of that is a tax on wealth, most is income or spending related. Government spending is closer to half, at 47.3% (the difference being a combination of deficit spending, sale of assets, and complicated economic things I don't quite understand). So, yes broadly speaking taxing about half of GDP, as Denmark and Sweden do, and cutting spending on blowing people up, might be enough. Unfortunately we're not even close to that figure right now.

Whilst the marginal tax rate on your income might be close to a third, the actual rate will be lower.

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Ricardus
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I can't persuade myself to see IHT as a great iniquity, for reasons expressed by others on this thread, but ISTM there are two problems with it:

- Firstly, the ways round it are so institutionalised that they can't really be called avoidance any more, but they do require forward planning. So ISTM it's really a tax on rich people who die unexpectedly, which seems slightly topsy-turvy;

- Secondly, I do think the double taxation problem that Marvin alludes to is a genuine problem.

In general, ISTM we tax the generation of wealth (e.g income tax or corporation tax) to reflect that the state had a part in creating that wealth, and we tax the ownership of wealth (e.g. council tax) to reflect that property generally involves, at least indirectly, taking some asset out of circulation that in the natural order of events would belong to the common weal (e.g. land or natural resources).

IHT doesn't really fall into either of these categories. Inheritance involves the transfer but not the generation of wealth, and if we think large estates ought to be taxed as a form of wealth tax, then that tax should apply all the time, not just because the owner happens to die. This makes it look more like a 'because we can' kind of tax.

[ 25. August 2013, 16:01: Message edited by: Ricardus ]

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Crœsos
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# 238

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quote:
Originally posted by Ricardus:
In general, ISTM we tax the generation of wealth (e.g income tax or corporation tax) to reflect that the state had a part in creating that wealth, and we tax the ownership of wealth (e.g. council tax) to reflect that property generally involves, at least indirectly, taking some asset out of circulation that in the natural order of events would belong to the common weal (e.g. land or natural resources).

Except taxes aren't applied to "the generation of wealth", just the transfer of money from one party to another. Very often this is associated with the generation of wealth, but not necessarily. For instance, the large salaries drawn by CEOs who drive their companies into the ground are still taxable, even though they were derived from the destruction of wealth.

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Humani nil a me alienum puto

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orfeo

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# 13878

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quote:
Originally posted by Arethosemyfeet:
quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by QLib:
...to justify not wanting to give part of your wealth to the communuty for the building of schools, hospitals, a police service, a fire service, courts, roads and bridges.

That's the thing though - everybody will have given a significant part of their wealth to the government. Income tax and national insurance take over a third of it straight away. Add on VAT, council tax, taxes on alcohol, tobacco and petrol and all the other extra taxes they use to wring as much out of us as they possibly can, and you're probably looking at every single person in the country having over half of their wealth taken off them by the taxman during their lives.

Is that not enough?

The % of GDP that is taken in tax is 38.9% as of 2011, nowhere near half. And very little of that is a tax on wealth, most is income or spending related. Government spending is closer to half, at 47.3% (the difference being a combination of deficit spending, sale of assets, and complicated economic things I don't quite understand). So, yes broadly speaking taxing about half of GDP, as Denmark and Sweden do, and cutting spending on blowing people up, might be enough. Unfortunately we're not even close to that figure right now.

Whilst the marginal tax rate on your income might be close to a third, the actual rate will be lower.

Or, you could go the other way, cut the inheritance tax, drop your tax as percentage of GDP to around our 22% which is Australia's level, and still end up looking like you're in a much better financial state (although the Opposition wouldn't have you believe that...).

Yes, I've found it slightly incongruous to have all these people bleating about how badly inheritance tax is needed. All the time I've been thinking "well no, you don't and we're doing fine". But now that I know what your tax percentage of GDP is, I really think you don't actually need inheritance tax if you don't want it.

Look, obviously it involves decisions about what government does and doesn't supply. Scandinavian countries have a high tax rate and they also have a very high level of government service. For the UK, the NHS might be a significant factor. But Australia is still a somewhat socialist country with a level of welfare that would have a right-wing American labelling us as a bunch of Commies, and we get by on a lower level of taxation, and we've got by without inheritance tax for 35 whole years. So I don't buy these arguments about how essential the money from death duties is.

I think you all just enjoy taxing the rich. Suddenly my traditional view of myself as left-leaning is being challenged.

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orfeo

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# 13878

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By the way, this page has a chart for the tax as percentage of GDP figures for all OECD countries, as of 2010.

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Marvin the Martian

Interplanetary
# 4360

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quote:
Originally posted by cliffdweller:
Do you have something particular you'd be willing to give up?

Aircraft carriers. Bombs and guns and soldiers to fuck up various parts of the Middle East. MP's expenses. Quangos. Ofsted. How many billion pounds per year (that the rest of us could keep in our back pockets) am I up to so far?

And as, for some reason, you're asking for me to drop something that I specifically want to keep, OK - I'll surrender HS2 if you surrender inheritance tax. Deal?

The daft thing is, I'm never going to be affected by IHT. Neither my parents nor my in-laws are rich enough for it to come into effect. And to be honest, I'd vote for it to be doubled if it meant I'd get a reduction in my personal tax bill. But every now and then I argue about things from an ethical standpoint rather than a practical one, and this is one of those times.

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Hail Gallaxhar

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Marvin the Martian

Interplanetary
# 4360

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quote:
Originally posted by orfeo:
I think you all just enjoy taxing the rich.

Enjoy? It's what they fucking live for. If there weren't any rich people to attack and demonise their lives wouldn't have any purpose. Sad, really.

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Hail Gallaxhar

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orfeo

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# 13878

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I just checked that paper I mentioned on the first page of the thread, because my memory was triggered, and...

Yep. Sweden. Sweden abolished death duties in 2005. High taxing, Scandinavian country decided it could do without the money.

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Justinian
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# 5357

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quote:
Originally posted by Chesterbelloc:
Great. I'm off to rip the wedding ring off your dead granny's finger, then. Ok by you?

I'll be impressed if you can reconstitute her from her ashes.

quote:
Originally posted by Marvin the Martian:
]That's the thing though - everybody will have given a significant part of their wealth to the government. Income tax and national insurance take over a third of it straight away. Add on VAT, council tax, taxes on alcohol, tobacco and petrol and all the other extra taxes they use to wring as much out of us as they possibly can, and you're probably looking at every single person in the country having over half of their wealth taken off them by the taxman during their lives.

Is that not enough?

If you object to taxation, you can look at how much of the wealth you have you owe to the society you live in. You didn't invent the language you use. You didn't invent electricity. You didn't invent the car. You didn't invent the refrigerator.

You yourself are responsible for very little of your success. If you were relying solely on your own merits you would be living as a hunter gatherer, possibly having possibly got the benefits of fire.

Now would it be a good idea to tax you to the extent that there was no difference between your income and that of a hunter gatherer? Hell, no. That wouldn't lead to good results for anyone. But more than 90% of the difference in living standard between you and a hunter gatherer is down to the society you live in, the society that is maintained by taxes. The rest of it is being in the right place at the right time. And one of the ways we maintain this as being the right place and the right time for people is through paying for it by taxation.

quote:
Originally posted by Ahleal V:
Whilst I realise I'm a little late to this party, this line from Justinian hit me rather hard. Why should this be the case? Is it not human principle to pass on what you have gathered to the following generation, and in doing so, bettering their life?

If you are taxed you are passing on what you have gathered to the following generation. The following generation of humans. And if you've personally gathered more than £325,000 after paying for your childrens' upbringing and everything else, I want to know how, why, and who you exploited to get to that point.

quote:
The objection seems to be, 'well, the descendants didn't work for it, so it is undeserved.' So what? Many things in this life are undeserved - intelligence, physical ability, good marriages, divorces - the financial outcome of divorces! - sudden and unexpected disability etc.
Translation: Life isn't fair. So we shouldn't try to make it more fair, especially not with fungible assets that will have far more of an impact on the needy.

quote:
The reason this hit so hard is that I am painfully aware that the only way that those I know in my situation will only ever be able to have a home is through investments made a generation or so before us. And likely, the the only way my descendants will probably be able to afford to go to university is through those same former investments.
Alternatively the speculated houses that have been inflated out of the reach of people our age get sold off - and the inheritance tax pays for university tuition fees.

quote:
Originally posted by Marvin the Martian:
The daft thing is, I'm never going to be affected by IHT. Neither my parents nor my in-laws are rich enough for it to come into effect. And to be honest, I'd vote for it to be doubled if it meant I'd get a reduction in my personal tax bill. But every now and then I argue about things from an ethical standpoint rather than a practical one, and this is one of those times.

The second irony is that I might just be affected by it. On the other hand I'm arguing a moral stance here too.

quote:
Originally posted by orfeo:
Or, you could go the other way, cut the inheritance tax, drop your tax as percentage of GDP to around our 22% which is Australia's level

[Citation Needed] - the numbers I get are around 30% for Australia.

quote:
For the UK, the NHS might be a significant factor.
Surprisingly not. Total spend on healthcare in the UK and Australia as a proportion of GDP is about the same (9% Australia, 9.3% UK) - with only a slightly higher proportion spent by the UK government.

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My real name consists of just four letters, but in billions of combinations.

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Leorning Cniht
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# 17564

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IHT is, in my opinion, a quite astonishingly bad wealth tax. The truly wealthy have a large number of options available to them to be able to reduce its effect, meaning that it's really only a tax paid by people of moderate wealth and by those who die unexpectedly, without their tax planning in order, and the occasional impecunious aristocrat whose only asset is the decaying country pile, which his heirs are desperately trying to shuffle off on to the National Trust, only to discover that the NT can't afford to maintain it either, and doesn't want it.

Various posters have talked about "unearned" wealth being due to the presence of the rest of society, and are advertising IHT as a means of reclaiming some of that gain for society. If we're talking about people's incomes being dependent on having roads, a legal system, property rights and all the stuff that governments do, then the rather more obvious way of paying for that is with the income tax, rather than with what looks a bit like a long-delayed tax on thrift.

If we're talking about the quite absurd growth in the price of property, the answer isn't to wait until someone dies, then grab half - it's a Land Value Tax.

Basically, the idea is that the value if your house consists of the value of the actual building, landscaping etc. (which is something you did - you bought it, you maintain and upgrade it, and so on) plus the value of the plot of land (which depends on things done by the rest of society, such as the presence of a convenient transport link, pretty scenery, or indeed "respectable" neighbours.

In which light, taxing the value of your land in order to maintain that society which causes its value is easily defensible. It also has the benefit that it's rather difficult to hide an acre or two of England's green and pleasant in an offshore bank account. As a fringe benefit, LVT also provides a feedback mechanism to slow stupid house price increases.

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Arethosemyfeet
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# 17047

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quote:
Originally posted by orfeo:
Yep. Sweden. Sweden abolished death duties in 2005. High taxing, Scandinavian country decided it could do without the money.

Presumably because it decided to get it from somewhere else or had a surplus. Britain has a deficit and is attempting to cut welfare in ways that is, more or less literally, killing people. If someone has an alternative method of raising the cash that doesn't involve shifting the burden from the rich to the poor, I'm all ears. I suspect, though, that any attempt to do so will meet with waffle about laffer curves and "wealth creators" and other self-serving bullshit from the Daily Hate and their puppets in government.
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orfeo

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# 13878

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Citation for Justinian is readily available thanks to our current election campaign.

That OECD chart had us around 25, I think. I don't know how long ago it was 30, but not any time recently.

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Touchstone
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# 3560

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quote:

Originally posted by Marvin the Martian:

quote:
--------------------------------------------------------------------------------
Originally posted by orfeo:
I think you all just enjoy taxing the rich.
--------------------------------------------------------------------------------

Enjoy? It's what they fucking live for. If there weren't any rich people to attack and demonise their lives wouldn't have any purpose. Sad, really.


OK, if you're going to get all ad hominem on my ass...

Do you find it comforting to to think that everyone here but you is motivated by self-interest?

Like Justinian, I'm also likely to be affected by IHT. My father has set up a trust fund to ensure that there is sufficient ready cash available to pay IHT when his estate goes to probate.

He could probably avoid it altogether if he wished but as a (relatively) rich family we can afford to contribute the fairly small proportion of our wealth that our democratically elected (more or less) government considers appropriate.

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Albertus
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# 13356

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I don't enjoy taxing the rich, or thinking about it: I wish there weren't any (very) rich people to tax. Similarly, I wish there weren't any (very and cripplingly) poor people to have to worry about. I'd like to live in a reasonably equal society, where we all have enough and a little to spare, so that we could all get on with being people.
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Marvin the Martian

Interplanetary
# 4360

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quote:
Originally posted by Justinian:
If you object to taxation,

I object to excessive or punitive taxation. Yes, we need to pay for services and infrastructure. That doesn't mean we need to punish people for being wealthy by taking as much of their wealth off them as possible.

quote:
You didn't invent the language you use. You didn't invent electricity. You didn't invent the car. You didn't invent the refrigerator.
Nor did the government.

quote:
If you are taxed you are passing on what you have gathered to the following generation. The following generation of humans.
Those of them who will be elected to government, perhaps. The rest of the next generation won't see much of it in their own pockets.

A rich society is one where lots of actual people are rich, not one where the government is rich and all the people are poor.

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Hail Gallaxhar

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Marvin the Martian

Interplanetary
# 4360

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quote:
Originally posted by Touchstone:
Do you find it comforting to to think that everyone here but you is motivated by self-interest?

Everybody is motivated by self-interest. Myself included. The government included. The politicians who make up the government especially included.

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Hail Gallaxhar

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Albertus
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# 13356

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Almost nobody is motivated by pure self-interest. We all wrestle with the angel and the serpent inside us. Pretty much everybody is motivated by a mix of self-interest, altruism, and some bits in between. The question is, what are the proportions in the mix?

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My beard is a testament to my masculinity and virility, and demonstrates that I am a real man. Trouble is, bits of quiche sometimes get caught in it.

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Touchstone
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# 3560

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quote:

Originally posted by Marvin the Martian:

Everybody is motivated by self-interest. Myself included. The government included. The politicians who make up the government especially included.


I completely agree. And a lot of the time, society is well served by people acting rationally in their own interest - at least it makes their behaviour reasonably predictable.

The debate around IHT, though, on this thread to some extent and in my own experience much more, seems to be characterised by an astonishing lack of knowledge of where one's own true interests lie. I repeat (ad nauseam, sorry) that most people will never have to pay or be affected by IHT. But there are IME two strong gut reactions to it:

1) Some people cherish the hope that they might receive an unexpected legacy, maybe from a bachelor great uncle or parents who turn out to have a secret fortune stashed away. And they see this hope of financial security, as illusory as a lottery win, being snatched away from them by a greedy government who will "take most of it away and give it to welfare scroungers". Or, more mundanely, they think that even if their parents don't have to sell the family home to pay for end-of-life care, the value of their 3-bedroom semi in Aberbackofbeyond will be eaten up by IHT when they finally do croak. Many people are completely ignorant of how IHT works - the threshold, the exemption of spouses, the transfer of the allowance to a surviving spouse, the rate at which it is charged. I know someone who was under the impression that the govt would take "about 90%" of an entire estate.

2) "Why should the government take everything I've worked for all my life, I want to leave it to my children" - This often from people who barely trouble the taxman each month with their meagre salaries, who are up to their eyes in debt and whose kids will be lucky to inherit the cost of their funeral. But because of the ignorance cited above, they think that anything they do manage to scrape together will be confiscated by the evil government.

A rational appraisal of IHT will show that most people's self-interest lies in keeping things as they are, and leaving worries about "death duties" and "grave robbing" to those few who are its true target.

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Jez we did hand the next election to the Tories on a plate!

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